Contents

People

Argentines are a fusion of diverse national and ethnic groups, with descendants of Italian and Spanish immigrants predominant (97%). Waves of immigrants from many European countries arrived in the late 19th and early 20th centuries. Syrian, Lebanese, and other Middle Eastern immigrants number about 500,000 to 600,000, mainly in urban areas. Argentina's population is overwhelmingly Catholic, but it also has the largest Jewish population in Latin America, estimated at between 280,000 and 300,000. In recent years, there has been a substantial influx of immigrants from neighboring countries, particularly Paraguay, Bolivia, and Peru. The indigenous population, estimated at 700,000, is concentrated in the provinces of the north, northwest, and south. The Argentine population has one of Latin America's lowest growth rates. Eighty percent of the population resides in cities or towns of more than 2,000, and over one-third lives in the greater Buenos Aires area.

Globally, Argentina is well known for its successful national football team, which won the FIFA World Cup in 1978 and 1986.

Government and Political Conditions

Argentina's constitution of 1853, as revised in 1994, mandates a separation of powers into executive, legislative, and judicial branches at the national and provincial level. Each province also has its own constitution, roughly mirroring the structure of the national constitution. The president and vice president are directly elected to 4-year terms. Both are limited to two consecutive terms; they are allowed to stand for a third term or more after an interval of at least one term. The president appoints cabinet ministers, and the constitution grants him considerable power, including authority to enact laws by presidential decree under conditions of "urgency and necessity" and the line-item veto.

Casa Rosada in Buenos Aires.

Since 2001, senators have been directly elected, with each province and the Federal Capital represented by three senators. Senators serve 6-year terms. One-third of the Senate stands for reelection every 2 years. Members of the Chamber of Deputies are directly elected to 4-year terms. Voters elect half the members of the lower house every 2 years. Both houses are elected via a system of proportional representation. Female representation in Congress—at nearly one-third of total seats—ranks among the world's highest, with representation comparable to European Union (EU) countries such as Austria and Germany. Female senators include Cristina Fernández de Kirchner, who was a nationally known member of the Senate for the Province of Santa Cruz before her husband was elected President, and was reelected on October 23, 2005 as a Senator for the Province of Buenos Aires.

The constitution establishes the judiciary as an independent government entity. The president appoints members of the Supreme Court with the consent of the Senate. The president on the recommendation of a magistrates' council appoints other federal judges. The Supreme Court has the power to declare legislative acts unconstitutional.

Political Parties

Obelisco by night, Buenos Aires.

The two largest political parties are the Justicialist Party (PJ—also called Peronist), founded in 1945 by Juan Domingo Perón, and the Union Civica Radical (UCR), or Radical Civic Union, founded in 1891. Traditionally, the UCR has had more urban middle-class support and the PJ more labor support, but both parties have become more broadly based. The PJ does not currently have a recognized national committee or leader due to internal differences. President Kirchner, a Peronist by origin, nominally is head of his Frente Para la Victoria (FPV) coalition that includes Peronists and non-Peronists aligned with him. Kirchner announced in July 2007 that he would not run for reelection in presidential elections in October 2007, and publicly supported the candidacy of his wife, Senator Cristina Fernandez de Kirchner. Fernandez de Kirchner formally announced her campaign for the presidency in July.

While the national leadership of the UCR remains in opposition to the Kirchner government, many of its governors, mayors, and other representatives have allied with President Kirchner. In the April 2003 presidential elections, the UCR received only 2% of the national vote, the lowest tally in the party's history. The UCR continues to retain significant strength in many parts of the country, and persons identifying with the party govern roughly one-third of the provinces. The UCR is the only opposition political party with a nationwide structure.

Smaller parties, such as the center-right Propuesta Republicana (PRO) and the left-leaning Afirmacion para una Republica Igalitaria (ARI) represent various positions on the political spectrum, and are strongest in Buenos Aires. PRO's candidate for mayor of Buenos Aires city, businessman Mauricio Macri, won a strong majority in elections in June 2007. He defeated Education Minister Daniel Filmus, who was supported by President Kirchner, in a high-visibility second round vote.

Historically, organized labor—largely tied to the Peronist Party—and the armed forces also have played significant roles in national life. However, the Argentine military's public standing suffered as a result of its perpetration of human rights abuses, economic mismanagement, and defeat by the United Kingdom during the period of military rule (1976–83). The Argentine military today is a downsized, volunteer force fully subordinate to civilian authority.

Principal Government Officials

Cristina and Nestor Kirchner.

President—Cristina Fernández de Kirchner

Minister of Foreign Affairs--

Ambassador to the United States--

Ambassador to the Organization of American States--

Ambassador to the United Nations--

Foreign Relations

Argentina's foreign policy priorities are focused on increasing regional partnerships, including expanding the MERCOSUR regional trade bloc by integrating Venezuela and Bolivia as new full members. Argentina has played a positive role in promoting human rights and democratic institutions in the hemisphere, particularly in Haiti. Argentina currently has nearly 600 peacekeeping troops in Haiti in support of MINUSTAH, reflecting its traditionally strong support of UN peacekeeping operations. As a member of the Board of Governors of the International Atomic Energy Agency, Argentina has been a strong voice in support of nuclear non-proliferation issues.

Defense

The president and a civilian minister of defense control the Argentine armed forces. The Interior Ministry controls the paramilitary Gendarmeria (border police), the Federal Police, the Prefectura Naval (coast guard), and the Airport Security Police. The Argentine armed forces maintain close defense cooperation and military supply relationships with the United States. Other countries also have military relationships with the Argentine forces, principally Israel, Germany, France, Spain, Italy, Brazil, Chile, and Venezuela.

The current Minister of Defense has pursued an aggressive restructuring program based on the Argentine 1988 defense law. Priorities include emphasis on joint operations and peacekeeping. There has been minimal recapitalization due to budget constraints experienced over the past 5 years.

Economy

Argentina's economy has sustained a robust recovery following the severe 2001/2002 economic crisis, with 4 consecutive years of over 8% growth in real gross domestic product (GDP). Argentine GDP reached U.S. $213 billion in 2006, approximately U.S. $5,460 per capita, with real investment up 18.7%. Economic expansion is creating jobs, with unemployment down from 20.4% in the first quarter of 2003 to 9.8% in the first quarter of 2007. Poverty levels have also dropped dramatically; 26.9% of the population in the 28 largest urban areas remained below the poverty line in the last half of 2006, down from over 50% in the immediate aftermath of the economic crisis.

Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Its post-crisis move to a flexible exchange rate regime and favorable international commodity and interest rate trends were catalytic factors in supporting renewed growth, allowing the government to accumulate a reserve cushion (over $40 billion as of June 2007) to help insulate the economy from external shocks. A higher tax burden and the recovery's strong impact on revenues allowed the government to record a primary fiscal surplus in 2006 equivalent to 3.5% of GDP. Argentina should continue to perform well in 2007 with GDP growth projected in the 7.5%-8% range. A range of economic experts have identified challenges to sustaining high levels of economic growth in the future, including capacity constraints; the need for substantial new investment in primary infrastructure; potential energy shortages in the face of high growth and energy prices below international market levels; and inflation (9.8% in 2006) and the government's heterodox policies to contain it, including pressure on the private sector to limit price increases.

Argentina's exchange rate policy is based on a managed float that appears to be targeting a nominal exchange rate in the 3 Argentine pesos (ARP) per U.S. dollar range. Market analysts consider the peso's real exchange rate broadly undervalued. This, along with historically high global commodity prices, has helped lift export volumes and value to record levels, resulting in a $12 billion trade surplus in 2006. Foreign trade equaled approximately 38% of GDP in 2006 (up from only 11% in 1990) and plays an increasingly important role in Argentina's economic development. Exports totaled approximately 22% of GDP in 2006 (up from 14% in 2002), and key export markets included MERCOSUR (21% of exports), the EU (18%), and NAFTA countries (13%). Total two-way trade with the U.S. in 2006 totaled almost $9 billion. The production of grains, cattle, and other agricultural goods continues to be the backbone of Argentina's export economy. Energy products, high technology goods, and services are emerging as significant export sectors.

Over 450 U.S. companies are currently operating in Argentina and employ over 150,000 Argentine workers. U.S. investment in Argentina is concentrated in the manufacturing, information, and financial sectors. Other major sources of investment include Spain, Chile, Italy, France, Canada, and Japan. Continuing Argentine arrears to international creditors (including over $20 billion in default claims by international bondholders and over $6 billion owed to official creditors, including the U.S. Government) and a large number of arbitration claims filed by foreign companies are legacies of the 2001/2002 economic crisis that remain to be resolved and adversely impact Argentina's investment climate.

History

Gaucho, 1868.

Europeans arrived in the region with the 1502 voyage of Amerigo Vespucci. Spanish navigator Juan Diaz de Solias visited what is now Argentina in 1516. Spain established a permanent colony on the site of Buenos Aires in 1580, although initial settlement was primarily overland from Peru. The Spanish further integrated Argentina into their empire by establishing the Vice Royalty of Rio de la Plata in 1776, and Buenos Aires became a flourishing port. Buenos Aires formally declared independence from Spain on July 9, 1816. Argentines revere Gen. Jose de San Martin—who campaigned in Argentina, Chile, and Peru—as the hero of their national independence. Following the defeat of the Spanish, centralist and federalist groups waged a lengthy conflict between themselves to determine the future of the nation. A modern constitution was promulgated in 1853, and a national unity government was established in 1861.

Two forces combined to create the modern Argentine nation in the late 19th century: the introduction of modern agricultural techniques and integration of Argentina into the world economy. Foreign investment and immigration from Europe aided this economic revolution. Investment, primarily from Britain, came in such fields as railroads and ports. As in the United States, the migrants who worked to develop Argentina's resources—especially the western pampas—came from throughout Europe.

From 1880 to 1930, Argentina became one of the world's 10 wealthiest nations based on rapid expansion of agriculture and foreign investment in infrastructure. Conservative forces dominated Argentine politics until 1916, when their traditional rivals, the Radicals, won control of the government. The Radicals, with their emphasis on fair elections and democratic institutions, opened their doors to Argentina's rapidly expanding middle class as well as to groups previously excluded from power. The Argentine military forced aged Radical President Hipolito Yrigoyen from power in 1930 and ushered in another decade of Conservative rule. Using fraud and force when necessary, the governments of the 1930s attempted to contain the currents of economic and political change that eventually led to the ascendance of Juan Domingo Perón (b. 1897). New social and political forces were seeking political power, including a modern military and labor movements that emerged from the growing urban working class.

The military ousted Argentina's constitutional government in 1943. Peron, then an army colonel, was one of the coup's leaders, and he soon became the government's dominant figure as Minister of Labor. Elections carried him to the presidency in 1946. He created the Partido Unico de la Revolucion, which became more commonly known as the Peronist or Justicialista party (PJ). He aggressively pursued policies aimed at empowering the working class and greatly expanded the number of unionized workers. In 1947, Peron announced the first 5-year plan based on the growth of industries he nationalized. He helped establish the powerful General Confederation of Labor (CGT). Peron's dynamic wife, Eva Duarte de Peron, known as Evita (1919–52), played a key role in developing support for her husband. Peron won reelection in 1952, but the military sent him into exile in 1955. In the 1950s and 1960s, military and civilian administrations traded power, trying, with limited success, to deal with diminished economic growth and continued social and labor demands. When military governments failed to revive the economy and suppress escalating terrorism in the late 1960s and early 1970s, the way was open for Peron's return.

Centro Cultural Islámico Rey Fahd, Buenos Aires.

On March 11, 1973, Argentina held general elections for the first time in 10 years. Peron was prevented from running, but voters elected his stand-in, Dr. Hector Campora, as President. Peron's followers also commanded strong majorities in both houses of Congress. Campora resigned in July 1973, paving the way for new elections. Peron won a decisive victory and returned as President in October 1973 with his third wife, Maria Estela Isabel Martinez de Peron, as Vice President. During this period, extremists on the left and right carried out violent acts with a frequency that threatened public order. The government resorted to a number of emergency decrees, including the implementation of special executive authority to deal with violence. This allowed the government to imprison persons indefinitely without charge.

Peron died on July 1, 1974. His wife succeeded him in office, but a military coup, led by Jorge Rafael Videla, removed her from office on March 24, 1976, and the armed forces formally exercised power through a junta composed of the three service commanders until December 10, 1983. The armed forces applied harsh measures against those they considered extremists and many suspected of being their sympathizers. While they were able to gradually restore basic order, the human costs of what became known as "El Proceso," or the "Dirty War" were high. Conservative counts list between 10,000 and 30,000 persons as "disappeared" during the 1976-83 period. Serious economic problems, mounting charges of corruption, public revulsion in the face of human rights abuses and, finally, the country's 1982 defeat by the United Kingdom in an unsuccessful attempt to seize the Falkland Islands (Islas Malvinas) all combined to discredit the Argentine military regime. The junta lifted bans on political parties and gradually restored basic political liberties.

Democracy returned to Argentina in 1983, with Raul Alfonsin of the country's oldest political party, the Radical Civic Union (UCR), winning the presidency in elections that took place on October 30, 1983. He began a 6-year term of office on December 10, 1983. In 1985 and 1987, large turnouts for mid-term elections demonstrated continued public support for a strong and vigorous democratic system. The UCR-led government took steps to resolve some of the nation's most pressing problems, including accounting for those who disappeared during military rule, establishing civilian control of the armed forces, and consolidating democratic institutions. However, failure to resolve endemic economic problems, and an inability to maintain public confidence undermined the effectiveness of the Alfonsin government, which left office 6 months early after Justicialista Party (PJ) candidate Carlos Saul Menem won the 1989 presidential elections.

President Menem imposed peso-dollar parity (convertibility) in 1992 to break the back of hyperinflation and adopted far-reaching market-based policies. Menem's accomplishments included dismantling a web of protectionist trade and business regulations, and reversing a half-century of statism by implementing an ambitious privatization program. These reforms contributed to significant increases in investment and growth with stable prices through most of the 1990s. Unfortunately, widespread corruption in the administrations of President Menem and his successor President Fernando De la Rua, who won election in 1999 at the head of a UCR-led coalition of center and center-left parties known as the "Alianza", shook confidence and weakened the recovery. Also, while convertibility defeated inflation, its permanence undermined Argentina's export competitiveness and created chronic deficits in the current account of the balance of payments, which were financed by massive borrowing. The contagion effect of the Asian financial crisis of 1998 precipitated an outflow of capital that gradually mushroomed into a 4-year depression that culminated in a financial panic in November 2001. In December 2001, amidst bloody riots, President De la Rua resigned.

A legislative assembly on December 23, 2001, elected Adolfo Rodriguez Saa (PJ) to serve as President and called for general elections to choose a new president within 3 months. Rodriguez Saa announced immediately Argentina's default on $88 billion in debt (the largest sovereign debt default in history), but expressed his commitment to maintain the currency board and the peso's 1-to-1 peg to the dollar. Rodriguez Saa, however, was unable to rally support from within his own party for his temporary administration and this, combined with renewed violence in the Federal Capital, led to his resignation on December 30. Yet another legislative assembly elected Eduardo Duhalde (PJ) President on January 1, 2002 to complete the term of former President De la Rua. Duhalde assumed office in the midst of a widespread public rejection of the "political class" in Argentina. Duhalde—differentiating himself from his three predecessors—quickly abandoned the peso's 10-year-old link with the dollar, a move that was followed by a sharp currency depreciation and rising inflation. In the face of increasing poverty and continued social unrest, Duhalde moved to bolster the government's social programs and to contain inflation. He was able to stabilize the social situation, but advanced presidential elections by 6 months in order to pave the way for a president elected with a popular mandate.

Cristina Fernández and governors.

In the first round of the presidential election on April 27, 2003, former President Carlos Menem (-PJ) won 24.3% of the vote, Santa Cruz Governor Nestor Kirchner (PJ) won 22%, followed by RECREAR candidate Ricardo Lopez Murphy with 16.4% and Affirmation for an Egalitarian Republic (ARI) candidate Elisa Carrio with 14.2%. Menem withdrew from the May 25 runoff election after polls showed overwhelming support for Kirchner in the second round of elections. President Kirchner assumed the presidency on May 25, 2003. He took office following the immense social and economic upheaval stemming from the financial crisis caused by a failed currency convertibility regime. Despite widespread concern, democracy and democratic institutions survived the crisis, and Nestor Kirchner took firm control as President. After taking office, Kirchner focused on consolidating his political strength and alleviating social problems. He pushed for changes in the Supreme Court and military and undertook popular measures, such as raising government salaries, pensions, and the minimum wage. On October 23, 2005, President Kirchner, bolstered by Argentina's rapid economic growth and recovery from its 2001/2002 crisis, won a major victory in the midterm legislative elections, giving him a strengthened mandate and control of a legislative majority in both the Senate and Chamber of Deputies. President Kirchner is considered by many experts to be the most powerful Argentine president since democracy was restored in 1983.